Jekyll2024-03-18T23:36:04+00:002024-03-18T23:36:04+00:002024-03-18T23:36:04+00:00https://mindspaninc.com/feed.xmlMindspan SystemsInnovation's Reliance on CRE2024-03-15T00:00:00+00:002024-03-15T00:00:00+00:00https://mindspaninc.com/blog/industry/Innovations-Reliance-on-Commercial-Real-Estate.htmlRich EdwardsA look at the linkage between square footage and power to the fastest-growing sectors of the economy
<p>A look at the linkage between square footage and power to the fastest-growing sectors of the economy</p>
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<img src="/assets/img/optimized/posts/Alan-Murray.webp" alt="Fortune CEO Alan Murray and his quote, "Businesses in the modern era must undergo two revolutions, a technology revolution, and an energy revolution, at the same time.""></img>
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<p>The week a look at the growing role energy and the financing behind it play in technology. Also, how data may play the ultimate role in the biggest winners of our current age.</p>
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<p><br /></p>
<h2 id="1-everyone-is-now-chasing-power-they-are-willing-to-look-everywhere-for-it">1. “Everyone is now chasing power. They are willing to look everywhere for it.”</h2>
<p>Much of the focus on AI-driven growth forecasts is on software (OpenAI) and the specialized hardware (Nvidia) required to deliver services. WaPo, however, has <a href="https://archive.is/Bt5fg">a look into the dynamics that are leading to land rushes</a> far away from the tech-centric hubs on the coasts.</p>
<blockquote>
<p>A major factor behind the skyrocketing demand is the rapid innovation in artificial intelligence, which is driving the construction of large warehouses of computing infrastructure that require exponentially more power than traditional data centers. AI is also part of a huge scale-up of cloud computing. Tech firms like <strong>Amazon, Apple, Google, Meta and Microsoft (AKA hypersclaers) are scouring the nation for sites for new data centers, and many lesser-known firms are also on the hunt.</strong></p>
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<p>Communities that had little connection to the computing industry now find themselves in the middle of a land rush, with data center developers flooding their markets with requests for grid hookups. <strong>Officials in Columbus, Ohio; Altoona, Iowa; and Fort Wayne, Ind. are being aggressively courted by data center developers.</strong> But power supply in some of these second-choice markets is already running low, pushing developers ever farther out, in some cases into cornfields.</p>
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<p><br /></p>
<p><img src="/assets/img/posts/Datacenter-Power-Growth.webp" alt="US data center demand is forecast to grow by some 10 percent a year until 2030 source: McKinsey" /></p>
<p>The growing demand with the scarcity of available commercial space, with current and future power capacity, is driving ever larger and longer-term deals, like <a href="https://www.datacenterdynamics.com/en/news/aws-acquires-talens-nuclear-data-center-campus-in-pennsylvania">AWS’s acquisition of a PA facility</a>.</p>
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<p>According to the investor presentation, <strong>Talen sold the site and assets of Cumulus Data for $650 million.</strong> The 1,200-acre campus draws power from Talen Energy’s neighboring 2.5GW nuclear power station in Luzerne County, the Susquehanna Steam Electric Station (SSES). Talen said AWS aims to develop a 960MW data center campus. The cloud company has minimum contractual power commitments that ramp up in 120MW increments over several years; AWS has a one-time option to cap commitments at 480MW. <strong>The cloud provider also has two 10-year extension options, tied to nuclear license renewals.</strong></p>
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<p><img src="/assets/img/posts/AWS-Datacenter-PA.webp" alt="Amazon's new facility next to one of the nation's largest nuclear power plants" /></p>
<p>Of course, banking’s role in energy-related financing is not without controversy or hazards. <a href="https://www.bankingdive.com/news/west-virginia-warns-6-banks-headed-restricted-list-fossil/709070/">All politics are local</a>.</p>
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<p>West Virginia State Treasurer Riley Moore said he sent notices to six financial institutions last week, warning them their institutions appear to “be engaged in boycotts of fossil fuel companies,” according to West Virginia law.</p>
<p>The six banks who received notice Feb. 22 about potentially being added to the state’s restricted financial institution list include BMO Bank, Citibank, Fifth Third Bank, Northern Trust, TD Bank and HSBC.</p>
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<p><br /></p>
<h2 id="2-who-gets-to-the-steep-part-of-the-s-curve-first">2. Who gets to the steep part of the S-curve first?</h2>
<p>Speaking of hyperscaling market players, NYU Professor Scott Galloway analyzes the acceleration of AI and why <a href="https://www.profgalloway.com/searching">data may still be the ultimate trump card</a> for capturing value in the future, even for companies that seemingly missed the boat.</p>
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<p><strong>This vast store of data is Alphabet’s deepest moat</strong>, and the company’s bridge to the future. This sort of data has become currency: Reddit, the Associated Press, Tumblr, WordPress — anyone with a full data center — have all monetized their (much smaller) pools of data for LLM training. Tesla will tell you that the biggest advantage it has in self-driving AI is the fleet — specifically, the years of real-world driving data that Teslas have sent back to HQ for processing by the company’s AI systems. <strong>But building better models isn’t how Alphabet can leapfrog OpenAI.</strong> It’s by customizing models that are purpose-built on its proprietary data sets.</p>
<p><strong>Alphabet’s data flex is not that it knows more about the world, but about you.</strong></p>
</blockquote>
<p>This is a reminder that any company, especially banking and financial services, that has data and knows its customers better than anyone else sits on an extremely valuable asset.</p>
<p>If handled and deployed expertly, it’s an asset that may be more valuable than anything else on your balance sheet.</p>
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<p><br /></p>
<p>And that is it for this Friday. For your listening pleasure, <a href="https://www.openculture.com/2024/03/hear-nirvanas-smells-like-teen-spirit-performed-in-classical-latin.html">the very classics of rock</a>. Click below to let us know how we did:</p>
<ul>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/03/15%20Post&body=Loved%20It">Loved it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/03/15%20Post&body=Hated%20It">Hated it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/03/15%20Post&body=Just%20Meh">It’s was just meh</a></li>
</ul>
The Risks of an Aging Population to Community Financial Institutions w/ Gazi Kabas2024-03-13T00:00:00+00:002024-03-13T00:00:00+00:00https://mindspaninc.com/Behind-The-Vault-Gavi-Kabas-The-Risks-of-an-Aging-Population-to-Community-Financial-Institutions.htmlRich EdwardsBehind the Vault Episode 8
<p>Behind the Vault Episode 8</p>
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<img src="/assets/img/optimized/posts/Assets-and-Debt-by-age-group.webp" alt="Figure 2 from Population Aging and Bank Risk-Taking, published Journal of Financial and Quantitative Analysis by Sebastian Doerr, Bank for International Settlements, Gazi Kabas, Tilburg University, and Steven Ongena, University of Zurich, KU Leuven, NTNU Business School, Swiss Finance Institute, and CEPR"></img>
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<p>How does the age distribution in your community directly impact your institution’s risk? In this episode, we talk with Gazi Kabas, co-author of the oft-cited paper Population Aging and Bank Risk Taking, which examines the effects on community banks and credit unions when the average age in their served markets quickly grows older.</p>
<p>Highlights from our discussion:</p>
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<p>Why this team of European economists are studying American financial institutions, and how their findings are not just relevant in the U.S.</p>
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<p>How demographic changes are impacting the risk profile and lending practices across the country.</p>
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<p>A look at the indicators of detailed analysis of loan-to-income ratios provides insights into banks’ lending behaviors, highlighting a propensity for increased risk-taking as populations age.</p>
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<p>The outsized risks for smaller community Fis.</p>
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<p>Some potential ways regulators and individual institutions can mitigate the individual and systemic risks to banking.</p>
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</ul>
<p>The full text of the paper can be found <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3430184">here</a>.</p>
<p>For more on Dr. Kabas’s research and to contact him, visit <a href="https://gkabas.netlify.app/">https://gkabas.netlify.app/</a>.</p>
<p><br /></p>
<div style="text-align: center;"><iframe class="youtube-video" src="https://www.youtube.com/embed/C4cWPtJBo-s" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe></div>
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<p>This is Behind the Vault: Conversations with Customer-Driven Bankers, the podcast dedicated to empowering CEOs, Presidents, and CMOs in the community banking and credit union industry. In this digital era, your role as a leader in these financial institutions is more crucial than ever. Join us as we explore the stories, strategies, and successes of fellow industry leaders, providing you with actionable insights to drive your institution toward unparalleled success.</p>
<p>To apply to be a guest on Behind the Vault: <a href="http://behindthevaultpod.com/guest">http://behindthevaultpod.com/guest</a></p>
CFPB card fee ruling, Community FI growth2024-03-08T00:00:00+00:002024-03-08T00:00:00+00:00https://mindspaninc.com/blog/industry/Card-Fees-Communtity-Growth-Fintech-and-Regulation.htmlRich EdwardsNew Reg Z rules, the recent draw of community banks and credit unions, and the role fintech might play in future growth
<p>New Reg Z rules, the recent draw of community banks and credit unions, and the role fintech might play in future growth</p>
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<img src="/assets/img/optimized/posts/Community-Bank-Relative-Growth.webp" alt="Relative growth of community banks and credit unions vs. all banks"></img>
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<p>This week we look at the CFPB final rules for credit card fees, the resurgence of interest in true “local” banking, and how technology and technical talent can increase that momentum.</p>
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<p><br /></p>
<h2 id="1-cfpb-final-rule-on-card-fees">1. CFPB Final Rule on Card Fees</h2>
<p>The CFPB this week issued an update to Reg Z this week adding <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-bans-excessive-credit-card-late-fees-lowers-typical-fee-from-32-to-8/">new limits to credit card penalty fees</a>. Highlights of the final rules:</p>
<blockquote>
<ul>
<li><strong>Lowers the immunity provision dollar amount for late fees to $8:</strong> Based on data analyzed by the CFPB, a late fee of $8 would be sufficient for larger card issuers, on average, to cover collection costs incurred as a result of late payments.</li>
<li><strong>Ends abuse of the automatic annual inflation adjustment:</strong> The CFPB found that many issuers hiked their late fees in lockstep each year without evidence of increased costs. The CFPB’s final rule eliminates the automatic annual inflation adjustment for the $8 late fee threshold. This adjustment was added by the Federal Reserve Board and is not required by law. The CFPB will instead monitor market conditions and adjust the $8 late fee immunity threshold as necessary.</li>
<li><strong>Requires credit card issuers to show their math:</strong> Larger card issuers will be able to charge fees above the threshold so long as they can prove the higher fee is necessary to cover their actual collection costs.</li>
</ul>
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<p>Of note, <a href="https://files.consumerfinance.gov/f/documents/cfpb_credit-card-penalty-fees-rule_key-changes-chart_2024-03.pdf">this summary chart of changes clarifies</a> the exception for smaller issuers.</p>
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<p>A card issuer is a smaller card issuer for purposes of this section if the card issuer together with its affiliates had fewer than one million open credit card accounts for the entire preceding calendar year. For purposes of this definition, affiliate means any company that controls, is controlled by, or is under common control with another company, as set forth in the Bank Holding Company Act of 1956.</p>
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<h2 id="2-switching-to-hometown-banks">2. Switching to hometown banks</h2>
<p>Imani Moise of the WSJ writes on the <a href="https://archive.is/uQBio">resilient growth of community banks and credit unions</a> despite larger banks getting larger in a trend of consolidation.</p>
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<p>Some bank customers are going small, pushing back against a wave of consolidation that has concentrated deposits and loans in a handful of the largest banks. Many have found that making a switch not only gets them more face time with bankers, but they are also earning more and paying less.</p>
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<p>The piece covers many of the trends driving the behavior, but in particular anecdotes of customer experience with large banks.</p>
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<p>Laurie Matta, the chief financial officer for the city of Clarksville, Tenn., decided to move the city’s bank accounts from the U.S.’s fifth largest lender, U.S. Bank, after a mix-up during the pandemic. The bank accidentally credited the city for a remote deposit twice, leaving an extra $150,000 in the account. It took six months, and many unsuccessful attempts to get the bank to correct the error, even though it shared an office building with city hall.</p>
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<p><br /></p>
<h2 id="3-regulation-talent-fintech-and-growth-in-banking">3. Regulation, talent, fintech, and growth in banking</h2>
<p>In a similar vein to the perils of banking consolidations, Ayo Kunle <a href="https://writing.kunle.app/p/fintech-can-save-the-american-banking">writes on the three main elements</a> that can prevent further consolidation of banking market in the US.</p>
<blockquote>
<p>I contend that two of three things must happen for the American banking system to have a shot at not becoming Canada/Brazil/Australia (with no offense to any of those countries). Either</p>
<p><strong>1. The regulatory framework for de-novo banking must become far more straightforward and predictable</strong> (resulting in higher return on capital opportunity for investors, or lower startup costs). This can drive more investor demand for the creation of new banks.<br />
<strong>2. The breadth of talent, practices, infrastructure and tools that have blossomed in fintech over the last decade must begin to migrate into the traditional financial system.</strong> This can be driven by traditional banks adopting the new technology, or new banks being built around them <br />
<strong>3. The underlying infrastructure on which our banking system runs must modernize;</strong> tools for real time money movement, real time exception detection, continuous compliance & reporting, synchronous front office and back office communication, and rules updated for modern life.</p>
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<p><img src="/assets/img/posts/De-novo-bank-charters-thru-2022.webp" alt="De novo bank charters issued thru 2022" /></p>
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<p><br /></p>
<p>That’s a wrap for this week. The new emerging risk to banks? <a href="https://www.nytimes.com/2024/02/28/us/chiefsaholic-bank-robbery-guilty.html">Super Bowl winning pseudo-mascots</a>. Click below to let us know how we did:</p>
<ul>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/03/8%20Post&body=Loved%20It">Loved it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/03/8%20Post&body=Hated%20It">Hated it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/03/8%20Post&body=Just%20Meh">It’s was just meh</a></li>
</ul>
When ownership is more than dividends w/ Peter Nelson of Glenwood State Bank2024-03-06T00:00:00+00:002024-03-06T00:00:00+00:00https://mindspaninc.com/Behind-The-Vault-Peter-Nelson-When-Ownership-is-more-than-Dividends.htmlRich EdwardsBehind the Vault Episode 7
<p>Behind the Vault Episode 7</p>
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<img src="/assets/img/optimized/posts/Peter-Nelson-Glenwood-State-Bank.webp" alt="Peter Nelson, President of Glenwood State Bank, Glenwood MN"></img>
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<p>In this episode ww dig into how close ownership opens up a different way of doing business. Glenwood State Bank president Peter Nelson shares the profound impact a purpose-driven approach can have on banking strategy and community engagement.</p>
<p>Highlights from our discussion:</p>
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<p>The history of the bank and the shift in measuring results from short-term financial returns to stewardship and long-term community impact.</p>
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<p>How the multifaceted nature of their community has shaped their diverse portfolio, including personal banking, commercial business, agriculture, insurance, and real estate.</p>
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<p>The challenges of maintaining the commitment to purpose through economic downturns.</p>
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<p>The advantage of the bank’s values and purposes for attracting and retaining employees aligned with the bank’s mission.</p>
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<p>The challenges of managing family business dynamics, including working with relatives and succession planning for future generations.</p>
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</ul>
<p>For more information or to connect with Peter Nelson and learn about their unique approach, visit <a href="https://glenwoodstate.bank/">https://glenwoodstate.bank/</a>.</p>
<p><br /></p>
<div style="text-align: center;"><iframe class="youtube-video" src="https://www.youtube.com/embed/MsINkaOowwI" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe></div>
<p><br /></p>
<hr />
<p>This is Behind the Vault: Conversations with Customer-Driven Bankers, the podcast dedicated to empowering CEOs, Presidents, and CMOs in the community banking and credit union industry. In this digital era, your role as a leader in these financial institutions is more crucial than ever. Join us as we explore the stories, strategies, and successes of fellow industry leaders, providing you with actionable insights to drive your institution toward unparalleled success.</p>
<p>To apply to be a guest on Behind the Vault: <a href="http://behindthevaultpod.com/guest">http://behindthevaultpod.com/guest</a></p>
Capital One - Discover Deal2024-03-01T00:00:00+00:002024-03-01T00:00:00+00:00https://mindspaninc.com/blog/industry/Capital-One-Discover-Deal.htmlRich EdwardsWhy the deal makes sense, holidays' impact on banking
<p>Why the deal makes sense, holidays' impact on banking</p>
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<img src="/assets/img/optimized/posts/Capital-One-Discover.webp" alt="Image of a Discover card being put into a wallet with a Capital One card"></img>
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<p>For this week, we look at a hot take on the Capital One offer for Discover Financial Services and the behind-the-scenes disruption of financial systems around holidays.</p>
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<h2 id="1-the-third-network">1. The third network</h2>
<p>In what will certainly get a lot of regulatory scrutiny, <a href="https://a16z.com/newsletter/capital-ones-discover-plan-jamil-khan-on-hr-blocks-genai-strategy-and-more/#capital-ones-discover-plan">Capital One has a $35B offer on the table for rival credit card Discover</a>. a16z’s Marc Andrusko speculates at why Discover may command a 28% premium.</p>
<blockquote>
<ol>
<li>Scale — the merger would create a pro forma $250 billion credit card loan book, which would be the largest in the country, surpassing J.P. Morgan’s $211 billion.</li>
<li>Regulatory arbitrage — Discover is carved out from the Durbin Amendment, which would mean a higher rate of debit interchange revenue for the combined entity.</li>
<li><strong>The creation of a large closed-loop network</strong> — the combined entity would operate as both the issuer and network at scale, which creates opportunities to provide merchants with more granular data and unique value-added services.</li>
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<p>That last point is the most significant. Marc Rubinstein has a <a href="https://www.netinterest.co/p/the-third-network">break down the history</a> of card networks and why the network is the crown jewel in the deal.</p>
<p><img src="/assets/img/posts/Discover-Volume.webp" alt="The growing volume on Discover's network" /></p>
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<p><br /></p>
<h2 id="2-financial-systems-take-a-holiday">2. Financial systems take a holiday</h2>
<p>In another banger post, Patrick McKenzie breaks down the implications, operational issues, and anti-fraud aspects of <a href="https://www.bitsaboutmoney.com/archive/financial-systems-take-a-holiday/">banking holidays</a>.</p>
<blockquote>
<p>Take Black Friday / Cyber Monday.</p>
<p>Anyhow, once a year, extremely predictable in timing but not necessarily in magnitude ($18.6B on Stripe alone over the long weekend in 2023), you do not need to float one day of sales, like you do daily. You do not need to float three days, like most weekends. You need to float five-ish days including the largest sale day of the year. And you whisper fervent prayers that all the wires you expect arrive exactly when you expect them.</p>
</blockquote>
<p>…and I concur with his assessment of <a href="https://www.youtube.com/watch?v=Hhy7JUinlu0">Jeremy Irons’ performance in Margin Call</a>.</p>
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<p><br /></p>
<p>That’s for this week, and now it’s March. I’m sure all of you struggling to recruit talent can identify with this struggle, “Recently, I was asked to fill a role for a chef, <a href="https://www.thecut.com/article/staffing-billionaires.html">literally just for Dobermans.</a>”</p>
<p>Click below to let us know how we did:</p>
<ul>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/30%20Post&body=Loved%20It">Loved it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/30%20Post&body=Hated%20It">Hated it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/30%20Post&body=Just%20Meh">It’s was just meh</a></li>
</ul>
Better Service and Less Cost through Digital w/ Amy McGraw of Tropical FCU2024-02-28T00:00:00+00:002024-02-28T00:00:00+00:00https://mindspaninc.com/Behind-The-Vault-Amy-McGraw-Better-Service-with-Digital-Experiences.htmlRich EdwardsBehind the Vault Episode 6
<p>Behind the Vault Episode 6</p>
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<img src="/assets/img/optimized/posts/Amy-McGraw-Tropical-FCU.webp" alt="Amy McGraw, Vice President of Marketing and Chief Experience Officer for Tropical Financial Credit Union"></img>
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<p>In this episode, we look at lessons learned from radically embracing a digital-first experience. Amy McGraw, VP of Marketing and Chief Experience Officer at Tropical Financial Credit Union, shares insights from their journey and the hard choices success demands.</p>
<p>Highlights from our discussion:</p>
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<p>Putting personalization first and the ability to break out of traditional marketing cadences.</p>
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<li>
<p>The importance of technical partners inside and outside the organization and the role Fintech and CUSOs play.</p>
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<p>Making the decisive and hard choice between physical and digital presence.</p>
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<p>The critical role core banking providers play</p>
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<li>
<p>The tactics for providing a personal experience and keeping a “people helping people” mindset in a digital-first organization</p>
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<li>
<p>The overlooked key capabilities in organizational change management essential to success</p>
</li>
</ul>
<p>For more information about Tropical Financial Credit Union and its innovative approaches to customer experience, visit <a href="https://tropicalfcu.com">tropicalfcu.com</a>.</p>
<p><br /></p>
<div style="text-align: center;"><iframe class="youtube-video" src="https://www.youtube.com/embed/LHDmaC2d3yk" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe></div>
<p><br /></p>
<hr />
<p>This is Behind the Vault: Conversations with Customer-Driven Bankers, the podcast dedicated to empowering CEOs, Presidents, and CMOs in the community banking and credit union industry. In this digital era, your role as a leader in these financial institutions is more crucial than ever. Join us as we explore the stories, strategies, and successes of fellow industry leaders, providing you with actionable insights to drive your institution toward unparalleled success.</p>
<p>To apply to be a guest on Behind the Vault: <a href="http://behindthevaultpod.com/guest">http://behindthevaultpod.com/guest</a></p>
Card Rate and AI Impact on Middle Class Work2024-02-23T00:00:00+00:002024-02-23T00:00:00+00:00https://mindspaninc.com/blog/industry/Fintech-threats-AI-middle-class-jobs.htmlRich EdwardsLower credit card rates at smaller FIs, addressing the labor crunch
<p>Lower credit card rates at smaller FIs, addressing the labor crunch</p>
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<source srcset="/assets/img/optimized/posts/David-Autor-On-Expertise.webp" type="image/webp">
<img src="/assets/img/optimized/posts/David-Autor-On-Expertise.webp" alt="Headshot and quote from David Autor from his 2024 NBER paper"></img>
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<p>For this last Friday in this leap year induced 29-day February, we have the CFPB’s study of credit card rates by institution size. Also, an economist’s look at the impact AI is starting to have on the tight (and growing tighter) labor market, think recruiting and training your next cohort of bankers.</p>
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<p><br /></p>
<h2 id="1-for-credit-cards-small-issuers-offer-lower-rates">1. For credit cards, small issuers offer lower rates</h2>
<p>The CFPB issues a report showing <a href="https://www.consumerfinance.gov/data-research/research-reports/credit-card-data-small-issuers-offer-lower-rates/">small issuers’ median credit card APRs are significantly lower than the largest institutions’ rates</a>, and impact on consumers from doing business with smaller financial institutions.</p>
<blockquote>
<ul>
<li>
<p>During the first half of 2023, small banks and credit unions tended to offer cheaper interest rates than the largest 25 credit card companies across all credit score tiers.</p>
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<p>The difference in reported Purchase Annual Percentage Rate (APR) between the largest and small issuers translated to <strong>average savings of $400 to $500 a year for a consumer with an average balance of $5,000 using a small bank or credit union’s card.</strong></p>
</li>
<li>
<p>Nearly half of the largest credit card issuers reported offering cards with a maximum purchase APR over 30%.</p>
</li>
<li>
<p>Products offered by large issuers were three times as likely to include an annual fee than those at small institutions. The average size of annual fees for the largest issuers was approximately 70% higher than at small institutions.</p>
</li>
</ul>
</blockquote>
<p><br /></p>
<p><img src="/assets/img/posts/CFPB-2023-Credit-Card-Rates.webp" alt="Median Purchase APR by Credit Tier" /></p>
<hr />
<p><br /></p>
<h2 id="2-ai-and-the-middle-class">2. AI and the middle class</h2>
<p>MIT economics professor David Autor has a new NBER working paper published in Noema titled <a href="https://www.noemamag.com/how-ai-could-help-rebuild-the-middle-class/">Applying AI to Rebuild Middle Class Jobs</a>.</p>
<blockquote>
<p>The industrialized world is awash in jobs, and it’s going to stay that way. Four years after the Covid pandemic’s onset, the U.S. unemployment rate has fallen back to its pre-Covid nadir while total employment has risen to nearly three million above its pre-Covid peak. Due to plummeting birth rates and a cratering labor force, a comparable labor shortage is unfolding across the industrialized world (including in China).</p>
</blockquote>
<blockquote>
<p><strong>This is not a prediction, it’s a demographic fact. All the people who will turn thirty in the year 2053 have already been born and we cannot make more of them.</strong> Barring a massive change in immigration policy, the U.S. and other rich countries will run out of workers before we run out of jobs.</p>
</blockquote>
<p>Autor points to the difference in the nature of AI, and its ability to solve expertise</p>
<blockquote>
<p>Like the Industrial and Computer revolutions before it, Artificial Intelligence marks an inflection point in the economic value of human expertise. To appreciate why, consider what distinguishes AI from the computing era that we’re now leaving behind. Pre-AI, computing’s core capability was its faultless and nearly costless execution of routine, procedural tasks. Its Achilles’ heel was its inability to master non-routine tasks requiring tacit knowledge. Artificial Intelligence’s capabilities are precisely the inverse.</p>
<p><strong>In a case of cosmic irony, AI is not trustworthy with facts and numbers — it does not respect rules. AI is, however, remarkably effective at acquiring tacit knowledge.</strong> Rather than relying on hard-coded procedures, AI learns by example, gains mastery without explicit instruction and acquires capabilities that it was not explicitly engineered to possess.</p>
</blockquote>
<p>A common issue for community banks and credit unions is recruiting and training talent. This is especially true for front-line tellers and support personnel. Gaps in experience are only solved with time in the job, today. What Autor points to is the ability to bring the collective experience and processes of your institution to every interaction. The virtual “expert” that whispers in the ear or displays the helpful prompt, <em>“This is what you do in this situation…..”.</em></p>
<p>For business models built on a “people helping people” differentiator, capabilities like this <strong>may not just be a way, but the way to success and sustainable growth.</strong></p>
<hr />
<p><br /></p>
<p>And that is it for this week. Anyone with teenagers will immediately recognize <a href="https://twitter.com/yoda4ever/status/1743024605995151724">the technique that this panda uses</a> for cleaning its house.</p>
<p>Click below to let us know how we did:</p>
<ul>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/23%20Post&body=Loved%20It">Loved it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/23%20Post&body=Hated%20It">Hated it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/23%20Post&body=Just%20Meh">It’s was just meh</a></li>
</ul>
Strategies for Growth that are Working Today with Gary Golden of BHCU2024-02-21T00:00:00+00:002024-02-21T00:00:00+00:00https://mindspaninc.com/Behind-The-Vault-Gary-Golden-Strategy-for-Growth.htmlRich EdwardsBehind the Vault Episode 5
<p>Behind the Vault Episode 5</p>
<picture>
<source srcset="/assets/img/optimized/posts/Gary-Golden-BHCU.webp" type="image/webp">
<img src="/assets/img/optimized/posts/Gary-Golden-BHCU.webp" alt="Gary Golden, CEO of BHCU of Delaware County PA"></img>
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<p id="article"></p>
<p>In this episode, we delve into the journey of BHCU with CEO Gary Golden. With a history going back to 1952, BHCU is taking on a new growth and expansion approach. We look at the strategies and tactics Gary and his team employ to deliver new paths for sustainable growth for an older credit union.</p>
<p>Highlights from our discussion:</p>
<ul>
<li>
<p>The strategic pivot to a community charter from a select employer group (SEG) charter and the geographic expansion into adjacent counties.</p>
</li>
<li>
<p>The critical role small businesses play for new business lines and a source of new members.</p>
</li>
<li>
<p>The grassroots approach to growth and BHCU’s shift in marketing spend from traditional advertising to one-on-one connections and personal relationships.</p>
</li>
<li>
<p>The selective use of technology in enhancing customer experience and balancing that with their differentiating in-person approach.</p>
</li>
<li>
<p>The role M&A plays in their plans and the unique challenges for credit unions to succeed with this approach</p>
</li>
</ul>
<p>To learn more about Gary and BHCU, visit <a href="https://bhcu.org/">https://bhcu.org/</a>.</p>
<p><br /></p>
<div style="text-align: center;"><iframe class="youtube-video" src="https://www.youtube.com/embed/XfWbgjqqIVI" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe></div>
<p><br /></p>
<hr />
<p>This is Behind the Vault: Conversations with Customer-Driven Bankers, the podcast dedicated to empowering CEOs, Presidents, and CMOs in the community banking and credit union industry. In this digital era, your role as a leader in these financial institutions is more crucial than ever. Join us as we explore the stories, strategies, and successes of fellow industry leaders, providing you with actionable insights to drive your institution toward unparalleled success.</p>
<p>To apply to be a guest on Behind the Vault: <a href="http://behindthevaultpod.com/guest">http://behindthevaultpod.com/guest</a></p>
Bank investment in AI, and new merger rules2024-02-16T00:00:00+00:002024-02-16T00:00:00+00:00https://mindspaninc.com/blog/industry/Banks-AI-agenda.htmlRich EdwardsWhere the money is going for institutions and the OCC's new M&A proposal
<p>Where the money is going for institutions and the OCC's new M&A proposal</p>
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<source srcset="/assets/img/optimized/posts/AI-chatbots-banking-backers.webp" type="image/webp">
<img src="/assets/img/optimized/posts/AI-chatbots-banking-backers.webp" alt="Table of AI chatbot developers backed by banking investors and their banking clients"></img>
</source>
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<p>For this week, we look at where banks are investing and expecting results from AI, and bank mergers get more scrutiny,</p>
<hr />
<p><br /></p>
<h2 id="1-the-ai-agenda-at-big-banks">1. The AI agenda at big banks</h2>
<p>Throughout earnings calls at big banks year to date, talk of AI jumped to an all-time high in both the number of institutions and frequency of mentions. Research firm CBInsights captures the sentiment of bankers’ bullish investments and partnerships in their <a href="https://www.cbinsights.com/research/report/top-tech-trends-2024/">Tech Trends 2024 report</a>.</p>
<blockquote>
<p><em>“Consumers interacted over 20 million times last year with Fargo, our AI-powered virtual assistant.”</em> Wells Fargo CEO Charles Scharf, Q1’24 earnings call</p>
</blockquote>
<blockquote>
<p><em>“…to the extent that we can deploy [AI] wisely, … we can always hire a little less if we see the efficiencies coming through and redeploy the people we have.”</em> Bank of America CEO Brian Moynihan, Q1’24 earnings call</p>
</blockquote>
<p>Much of the focus is on operational efficiency and reducing costs.</p>
<p><img src="/assets/img/posts/GenAI-Use-Cases-for-Banks.webp" alt="Many banks view genAI as an operational silver bullet" /></p>
<hr />
<p><br /></p>
<h2 id="2-the-occ-shines-more-light-on-banking-mergers">2. The OCC shines more light on banking mergers</h2>
<p>Pete Schroder at Reuters reports on the Office of the Comptroller of the Currency (OCC) proposal for increased <a href="https://www.reuters.com/business/finance/us-bank-regulator-boost-transparency-merger-reviews-scrap-automatic-approvals-2024-01-29/">transparency regulations for bank mergers and acquisitions</a>.</p>
<blockquote>
<p>The move by the agency comes amid industry criticism that regulators are too opaque in their handling of bank deals, and as analysts expect more consolidation among small lenders struggling with flagging margins.</p>
</blockquote>
<p>Acting Comptroller Michael Hsu laid out issues with both “good deals” that are being slowed by regulations and “bad deals” that aren’t getting a close enough look. This effort comes at a time when the agency has taken criticism for last year’s rescue of First Republic by JPMC.</p>
<blockquote>
<p>Some mergers are problematic because the banks involved have supervisory issues, whereas banks that have a high supervisory rating with no lingering enforcement concerns are more likely to get the green light for a merger or acquisition, Hsu said.</p>
<p>At the same time, the agency proposed scrapping a 1996 policy under which some deals are automatically approved if the OCC does not act on the application within a certain timeframe.</p>
</blockquote>
<blockquote>
<p><em>“You have two risks with mergers: One risk is that we approve too many mergers and therefore we’re approving bad mergers. The other risk is we approve too few mergers and therefore there are good mergers that should happen that aren’t,”</em> he said. <em>“The purpose of being transparent is to encourage more accuracy on both ends.”</em></p>
</blockquote>
<hr />
<p><br /></p>
<p>And that is it for this Friday. I think we all have a story of problematic family issues that takes a funny turn, but <a href="https://digg.com/digg-vids/link/tiktok-dad-breakdancing-madi-hart">probably not this funny</a>.</p>
<p>How’d we do this week? Let us know:</p>
<ul>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/16%20Post&body=Loved%20It">Loved it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/16%20Post&body=Hated%20It">Hated it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/16%20Post&body=Just%20Meh">It’s was just meh</a></li>
</ul>
Banking Customer Experience, Gaps and Blindspots w/ Mark Arnold2024-02-14T00:00:00+00:002024-02-14T00:00:00+00:00https://mindspaninc.com/Behind-The-Vault-Mark-Arnold-Banking-Customer-Experience-Gaps-and-Blindpspots.htmlRich EdwardsBehind the Vault Episode 4
<p>Behind the Vault Episode 4</p>
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<source srcset="/assets/img/optimized/posts/Mark-Arnold-BTV4.webp" type="image/webp">
<img src="/assets/img/optimized/posts/Mark-Arnold-BTV4.webp" alt="Mark Arnold, President and Founder of On The Mark Strategies"></img>
</source>
</picture>
<p id="article"></p>
<p>In this episode, we talk with Mark Arnold, President and Founder of On the Mark Strategies, to discuss the importance of customer experience in community financial institutions. We also discuss the often missed tactics for improving experience as a powerful competitive advantage.</p>
<p>Topics discussed:</p>
<ul>
<li>
<p>Why customer experience is a competitive advantage, and how institutions could be missing out on up to 40% of potential business due to subpar customer experiences.</p>
</li>
<li>
<p>Identifying gaps in service, the Johari Window, and where to look for the most common areas community banks and credit unions underdeliver for their customers and members.</p>
</li>
<li>
<p>The common blind spots that trip up FIs and how they affect the organization’s performance and growth.</p>
</li>
<li>
<p>Working customer experience assessments into planning and keeping up with changing consumer expectations.</p>
</li>
</ul>
<p><strong><em>“We’ve learned to glance at our competitors and glare at ourselves.”</em></strong></p>
<p>To learn more about Mark Arnold and his work, visit <a href="https://markarnold.com">markarnold.com</a></p>
<p><br /></p>
<div style="text-align: center;"><iframe class="youtube-video" src="https://www.youtube.com/embed/Afl-2KLBC-A" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe></div>
<p><br /></p>
<hr />
<p>This is Behind the Vault: Conversations with Customer-Driven Bankers, the podcast dedicated to empowering CEOs, Presidents, and CMOs in the community banking and credit union industry. In this digital era, your role as a leader in these financial institutions is more crucial than ever. Join us as we explore the stories, strategies, and successes of fellow industry leaders, providing you with actionable insights to drive your institution toward unparalleled success.</p>
<p>To apply to be a guest on Behind the Vault: <a href="http://behindthevaultpod.com/guest">http://behindthevaultpod.com/guest</a></p>
Powell Speaks, NYCB Struggles2024-02-09T00:00:00+00:002024-02-09T00:00:00+00:00https://mindspaninc.com/blog/industry/Powell-Interview-NYCB-Struggles.htmlRich EdwardsThe Fed Chief's public comments, Regional Bank troubles
<p>The Fed Chief's public comments, Regional Bank troubles</p>
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<source srcset="/assets/img/optimized/posts/Powell-60-minutes.webp" type="image/webp">
<img src="/assets/img/optimized/posts/Powell-60-minutes.webp" alt="Fed Chair Jay Powell from a 60 minutes interview aired 2-4-24"></img>
</source>
</picture>
<p>This week, we look at Fed Chair Jay Powell’s rare public interview and Regional bank troubles in NY.</p>
<hr />
<p><br /></p>
<h2 id="1-powel-on-rates-and-the-economy">1. Powel on rates and the economy</h2>
<p>Fortune’s CEO Alan Murray writes (in his excellent daily <a href="https://fortune.com/newsletters/ceo-daily?tpcc=NL_Marketing">newsletter</a>) on Fed Chairman Jay Powell’s appearance on 60 Minutes last weekend.</p>
<blockquote>
<p>Fed chairs don’t frequently appear on television. Paul Volcker almost never did. Alan Greenspan did it once—Oct. 4, 1987—and was asked if he was enjoying his new job. His answer: “So far.” Two weeks later, the market dropped 22%, and he never went on TV again.*</p>
</blockquote>
<p>*Of course, outside appearance before Congress.</p>
<p>Selected highlights:</p>
<blockquote>
<p>When will you cut interest rates?</p>
<p><em>“Well, we have a strong economy. Growth is going on at a solid pace. The labor market is strong: 3.7% unemployment. And inflation is coming down. With the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully.”</em></p>
<p>Is there unanimity among Fed officials that it should happen this year?</p>
<p><em>“Almost all of the 19 participants who sit around this table believe that it will be appropriate in their most likely case for us to cut the federal funds rate this year.”</em></p>
<p>Will the decision be influenced by the election?</p>
<p><em>“We do not consider politics in our decisions. We never do. And we never will.”</em></p>
<p>Should you have raised rates sooner than you did?</p>
<p><em>“In hindsight, it would’ve been better to have tightened policy earlier.”</em></p>
<p>Is it unusual to beat back inflation without prompting a recession?</p>
<p><em>“Yeah, it’s historically unusual… I’ll tell you why I think it is. And that is that it was these pandemic-related distortions, both of demand and supply.”</em></p>
<p>Is rising federal debt a problem?</p>
<p><em>“We mostly try very hard not to comment on fiscal policy and instruct Congress on how to do their job when actually they have oversight over us…I would say this: in the long run, the U.S. federal government is on an unsustainable fiscal path.”</em></p>
<p>With people working from home and office real estate crashing, could there be another banking crisis?</p>
<p><em>“I don’t think that’s likely…We looked at the larger banks’ balance sheets, and it appears to be a manageable problem. <strong>There are some smaller and regional banks that have concentrated exposures in these areas that are challenged.”</strong></em> (see below)</p>
<p>Will China’s economic problems affect the U.S.?</p>
<p><em>“Our financial system is not deeply intertwined with theirs. Our production systems are not deeply intertwined with theirs…We may feel them a bit, but they shouldn’t be that large.”</em></p>
<p>Why is immigration so important to the economy?</p>
<p><em>“Well, first of all, immigration policy is not the Fed’s job…I will say, over time, though, the U.S. economy has benefited from immigration. And, frankly, just in the last year, a big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era.”</em></p>
<p>What’s the greatest threat to the economy?</p>
<p><em>“I think in the near term, I would point to the geopolitical risks…There’s a war going on in Ukraine. There’s a war going on in the Middle East, and there’s potential trouble in Asia.”</em></p>
<p>What’s the single most important factor for the future of American prosperity?</p>
<p><em>“Single most important factor? Well, with your permission, I’ll name two things.</em></p>
<p><em>One is I think we need to just remember that we have this dynamic, innovative, flexible, adaptable economy. More so than other countries. And this is the big reason why our economy has come through so well…</em></p>
<p><em>The other thing I’ll point to, for the United States, is: There’s a real desire for American leadership. Since World War II, the United States has been the indispensable nation supporting and defending democracy, security arrangements, economic arrangements…And it is clear that the world wants that. And I would want people in the United States to know that this has benefited our country enormously. It benefits our economy so much. And I hope that continues.”</em></p>
</blockquote>
<p><a href="https://www.cbsnews.com/news/full-transcript-fed-chair-jerome-powell-60-minutes-interview-economy/?tpcc=NL_Marketing">Video and full transcript of the interview here.</a></p>
<hr />
<p><br /></p>
<h2 id="2-new-york-community-bankcorps-struggles">2. New York Community Bankcorp’s struggles</h2>
<p>Felix Salmon of Axios looks at the <a href="https://www.axios.com/2024/02/07/new-york-community-bancorps-struggles">flagging performance of regional bank NYCB</a>:</p>
<blockquote>
<p>New York Community Bancorp,a midsized New York lender, once looked like a winner of the regional banking crisis of 2023. Now it’s in trouble.</p>
<p><strong>Why it matters:</strong> The bank’s shares have been plunging over the past week — and with more than $100 billion of assets, NYCB is big and important enough that its failure, were it to happen, would reverberate nationally and even internationally.</p>
<p><strong>Where it stands:</strong> NYCB is not a Wall Street institution. Its headquarters are literally in a town named Hicksville, a place that senior investment bankers might occasionally fly over in a helicopter on their way to their summer house in the Hamptons.</p>
<ul>
<li>NYCB’s assets — its loans — are heavily weighted toward commercial and multi-family real estate. The former has been hit hard by the failure of New Yorkers to return to the office after the pandemic, while the latter has suffered in the wake of a 2019 law that made it much harder for landlords to raise rents.</li>
</ul>
</blockquote>
<p>On the anniversary of the last major bank scare, NYCB doesn’t face asset flight, yet. Its biggest trouble is its acquisitions.</p>
<blockquote>
<ul>
<li>After the two acquisitions, NYCB found itself over the $100 billion mark for total assets — a level which comes with significantly increased scrutiny from regulators and stricter capital requirements.</li>
</ul>
<p><strong>Driving the news:</strong> On Jan. 31, NYCB announced it had lost money in the fourth quarter, after taking a $552 million provision for credit losses on its commercial real-estate portfolio. It also slashed its dividend.</p>
<ul>
<li>That precipitated a plunge in the share price, as well as the revelation that the bank’s chief risk officer and chief audit officer had both been pushed out.</li>
<li>On Tuesday, Moody’s cited “high governance risks” as it downgraded the bonds of NYCB’s parent company to junk status. (Flagstar Bank, however, retains its investment-grade deposit rating.)</li>
</ul>
</blockquote>
<p><img src="/assets/img/posts/NYCB-4Q23-Net-Income.webp" alt="New York Community Bancorp net income" /></p>
<hr />
<p><br /></p>
<p>And on the topic of banking acquisitions…</p>
<p><strong><em>“Don’t dabble! Committing is the only way it works.”</em></strong></p>
<p>From the latest episode of our podcast, Behind the Vault, we spoke with UniFi Financial’s CEO, J.R. Grimshaw, on <a href="/Behind-The-Vault-RJ-Grimshaw-Winning-the-Acquisition-Game-in-Banking.html">how they made their acquisition by community FI, Bank of Ann Arbor, a screaming success</a>.</p>
<hr />
<p>And to roll into your weekend, enjoy this line of copy never seen before: “For eight months, the alleged secret agent was held in custody… <a href="https://archive.is/TQhDH">then the animal rights nonprofit PETA helped secure the bird’s release.”</a></p>
<p>Click below to let us know how we did:</p>
<ul>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/9%20Post&body=Loved%20It">Loved it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/9%20Post&body=Hated%20It">Hated it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/9%20Post&body=Just%20Meh">It’s was just meh</a></li>
</ul>
Winning the Acquisition game as a Community Bank with R.J. Grimshaw2024-02-07T00:00:00+00:002024-02-07T00:00:00+00:00https://mindspaninc.com/Behind-The-Vault-RJ-Grimshaw-Winning-the-Acquisition-Game-in-Banking.htmlRich EdwardsBehind the Vault Episode 3
<p>Behind the Vault Episode 3</p>
<picture>
<source srcset="/assets/img/optimized/posts/RJ-Grimshaw-BTV3.webp" type="image/webp">
<img src="/assets/img/optimized/posts/RJ-Grimshaw-BTV3.webp" alt="R.J. Grimshaw, CEO and Founder of Able Leadership"></img>
</source>
</picture>
<p id="article"></p>
<p>In this episode, we hear the story of the Bank of Ann Arbor’s acquisition of UniFi Equipment Finance and its successful entry into an entirely new business line. CEO R.J. Grimshaw joined UniFi shortly after their purchase and led the integration and rapid growth of the business as a product line of a regulated bank.</p>
<p>Highlights from our discussion:</p>
<ul>
<li>
<p>Transforming a 35-year-old company into a new culture, implementing new business systems, and introducing the compliance and regulatory structures of a regulated bank.</p>
</li>
<li>
<p>Avoiding the biggest mistakes banks make buying a commercial loan or leasing organization</p>
</li>
<li>
<p>Navigating the transition from a ZIRP environment into the rapidly rising rates, inflation and asset cost growth, and finding new sources of business when OEM is kneecapped by supply chain issues.</p>
</li>
</ul>
<p>To learn more and contact R.J. visit <a href="https://rjgrimshaw.com">rjgrimshaw.com</a></p>
<p><br /></p>
<div style="text-align: center;"><iframe class="youtube-video" src="https://www.youtube.com/embed/5kEUZCrsXvU?si=UAb1C_dkR5TjBdAV" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe></div>
<p><br /></p>
<hr />
<p>This is Behind the Vault: Conversations with Customer-Driven Bankers, the podcast dedicated to empowering CEOs, Presidents, and CMOs in the community banking and credit union industry. In this digital era, your role as a leader in these financial institutions is more crucial than ever. Join us as we explore the stories, strategies, and successes of fellow industry leaders, providing you with actionable insights to drive your institution toward unparalleled success.</p>
<p>To apply to be a guest on Behind the Vault: <a href="http://behindthevaultpod.com/guest">http://behindthevaultpod.com/guest</a></p>
Data, Check Cashing, The World of Cards2024-02-02T00:00:00+00:002024-02-02T00:00:00+00:00https://mindspaninc.com/blog/industry/Data-Check-Cashing-Cards.htmlRich EdwardsA loud endorsement of the CFPB Data Rights proposal, alternate finance isn't always about the unbanked
<p>A loud endorsement of the CFPB Data Rights proposal, alternate finance isn't always about the unbanked</p>
<picture>
<source srcset="/assets/img/optimized/posts/CC-Network-By-Cards.webp" type="image/webp">
<img src="/assets/img/optimized/posts/CC-Network-By-Cards.webp" alt="Infographic on the number of credit cards in circulation by network"></img>
</source>
</picture>
<p>This week, a look at support for the CFPB’s Open Banking rules, check cashing vs. traditional banking, and a top-down view of credit and debit cards market size.</p>
<hr />
<p><br /></p>
<h2 id="1-cfpb-data-rules">1. CFPB data rules</h2>
<p>Security expert Bruce Schneirer <a href="https://www.schneier.com/blog/archives/2024/01/cfpbs-proposed-data-rules.html">analyzes the proposal from the CFPB</a> in their pending change to the CFPA titled <em>Personal Financial Data Rights</em>. Schenirer is a voice often quoted in the domain of security, and he has little sympathy for legacy system issues.</p>
<blockquote>
<p>On the banking side, the steady consolidation of the banking sector has resulted in a small number of very large banks holding most deposits and thus most financial data. Behind the scenes, a variety of financial data clearinghouses—companies most of us have never heard of—get breached all the time, losing our personal data to scammers, identity thieves and foreign governments.</p>
<p>The CFPB’s new rules would require institutions that deal with financial data to provide simple but essential functions to consumers that stand to deliver security benefits. <strong>This would include the use of application programming interfaces (APIs) for software, eliminating the barrier to interoperability presented by today’s baroque, non-standard and non-programmatic interfaces to access data.</strong> Each such interface would allow for interoperability and potential competition. The CFPB notes that some companies have tried to claim that their current systems provide security by being difficult to use. As security experts, we disagree: <strong>Such aging financial systems are notoriously insecure and simply rely upon security through obscurity</strong>.</p>
</blockquote>
<p>The use and handling of financial data is increasingly becoming a required core competency for financial institutions of all sizes. The regulator costs of mistakes are rising. However, that burden is also compounding the value of 1st party data, and opening competitive advantages for even the smaller organization that can harness it to provide unique and standout offerings and service.</p>
<hr />
<p><br /></p>
<h2 id="2-the-business-of-check-cashing">2. The business of check cashing</h2>
<p>Banking and payments expert Patrick McKenzie (aka @patio11) writes a <a href="https://www.bitsaboutmoney.com/archive/the-business-of-check-cashing/">direct and blunt assessment of the check cashing industry</a> and how it manages to co-exist with traditional banks.</p>
<blockquote>
<p>The clerk at a check cashing business is not a bank teller. She does not disdain talking to poor people; being able to do that in such a way that most poor people end up liking her is her job. Don’t take my word for it; take the customers’. We have studied this industry extensively. We ran surveys. The customers keep saying things like <strong>“I like my local check cashing place because the girl behind the counter is kind and doesn’t judge me like those #%*(#%( at the bank.”</strong></p>
<p>You can present as being kind to almost all of your customers and be obviously unemployable as a bank teller.</p>
</blockquote>
<hr />
<p><br /></p>
<h2 id="3-card-chronicles">3. Card Chronicles</h2>
<p>Finance data visualization blog Genuine Impact presents a look at the stats around the <a href="https://genuineimpact.substack.com/p/card-chronicles">credit and debit industry by issuing networks</a>.</p>
<blockquote>
<p>Out of all credit cards in circulation globally, <strong>57.5% of them are from Visa</strong>- that’s a huge amount! The next most popular credit card network is Mastercard, responsible for 37.5%. These two networks alone make up 92% of all credit cards in circulation. The next 3 highest are JCB, American Express (both at 2%), followed by Discover (1%).</p>
</blockquote>
<p><img src="/assets/img/posts/CC-Network-By-Transaction-Volume.webp" alt="Transaction volume over time by network" /></p>
<blockquote>
<p>Visa comes out on top again for credit card networks by total volume, with almost $15T in 2023. Mastercard has consistently had just over half of Visa’s total volume, while American Express is a lot lower. <strong>Perhaps one reason here could be down to AmEx’s higher processing fees for merchants.</strong> Another thing to note here is they all demonstrate a slight dip in total volume in 2020 which is obviously down to people spending less during Covid.</p>
</blockquote>
<p>The Genuine Impact teams also present an interesting look at the top purchase volume by debit card issuer, with the overwhelming top positions of Chinese mega banks.</p>
<hr />
<p>Check out the latest episode of our podcast, Behind the Vault. This week, we spoke with Toshiba Global Commerce COO Gregg Margosian about how <a href="/Behind-The-Vault-Gregg-Margosian-Consumer-Behaviour.html">consumer demand for self-checkout is changing the face of retail and payments</a>.</p>
<hr />
<p>A thought to leave you with for the week is advice from Irish professional golfer and 3-time major champion Pádraig Harrington on sharing your hobbies and passions with your kids.</p>
<blockquote class="twitter-tweet"><p lang="en" dir="ltr">If you’re a dad and you want your kids to share hobbies with you, watch this video. <br /><br />Nothing is more important to me in life than sharing memories with my kids and making them want to be around me when they’re old enough to not be around me.<br /><br /> <a href="https://t.co/dkbMxHZMVK">pic.twitter.com/dkbMxHZMVK</a></p>— Nick Huber (@sweatystartup) <a href="https://twitter.com/sweatystartup/status/1737076118195208269?ref_src=twsrc%5Etfw">December 19, 2023</a></blockquote>
<script async="" src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
<hr />
<p><br /></p>
<p>Click below to let us know how we did:</p>
<ul>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/2%20Post&body=Loved%20It">Loved it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/2%20Post&body=Hated%20It">Hated it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/02/2%20Post&body=Just%20Meh">It’s was just meh</a></li>
</ul>
Consumer Behavior and Payments w/ Gregg Margosian, Toshiba Global Commerce Solutions2024-01-31T00:00:00+00:002024-01-31T00:00:00+00:00https://mindspaninc.com/Behind-The-Vault-Gregg-Margosian-Consumer-Behaviour.htmlRich EdwardsBehind the Vault Episode 2
<p>Behind the Vault Episode 2</p>
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<img src="/assets/img/optimized/posts/BTV-EP2.webp" alt="Gregg Margosian, COO, Toshiba Global Commerce Solutions"></img>
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<p>In this episode of our podcast Behind the Vault, we sit down with Gregg Margosian, Chief Operating Officer of <a href="https://commerce.toshiba.com">Toshiba Global Commerce Solutions</a>, a company deeply embedded in the world of retail store systems. Gregg provides insight into emerging consumer behavior trends and how they impact payment systems in the US.</p>
<p>Topics discuss:</p>
<ul>
<li>Why self-checkout is becoming the norm in retail, with a preference of 85% for shoppers</li>
<li>How the pandemic reshaped mobile payments and what this means for the future of contactless payments like Apple Pay</li>
<li>The persistence of cash in an increasingly digital world and the cultural factors driving it</li>
<li>Potential breakthroughs in mobile payments and whether a major player could revolutionize the industry</li>
<li>The challenges and opportunities for retailers in the changing payment landscape</li>
</ul>
<p><br /></p>
<div style="text-align: center;"><iframe class="youtube-video" src="https://www.youtube.com/embed/WaIYF-dxsD0?si=XnlikcYsFRj2sF_Q" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe></div>
<p><br /></p>
<hr />
<p>This is Behind the Vault: Conversations with Customer-Driven Bankers, the podcast dedicated to empowering CEOs, Presidents, and CMOs in the community banking and credit union industry. In this digital era, your role as a leader in these financial institutions is more crucial than ever. Join us as we explore the stories, strategies, and successes of fellow industry leaders, providing you with actionable insights to drive your institution toward unparalleled success.</p>
<p>To apply to be a guest on Behind the Vault: <a href="http://behindthevaultpod.com/guest">http://behindthevaultpod.com/guest</a></p>
Mixed results in 4Q, RTP rolls on2024-01-26T00:00:00+00:002024-01-26T00:00:00+00:00https://mindspaninc.com/blog/industry/Mixed-Banking-Results-RTP-Renewal.htmlRich EdwardsThe contradictory takes on banking profits, The Clearing House commits to real-time payments
<p>The contradictory takes on banking profits, The Clearing House commits to real-time payments</p>
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<source srcset="/assets/img/optimized/posts/Mark-Mason.webp" type="image/webp">
<img src="/assets/img/optimized/posts/Mark-Mason.webp" alt="Picture of Citi CFO Mark Mason"></img>
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<p>The week a look at the continued mix messages from banking earnings calls. Also, MasterCard and The Clearing House double down on real-time payments.</p>
<hr />
<p><br /></p>
<h2 id="1-reading-bank-earnings">1. Reading bank earnings</h2>
<p>Gina Heeb at the WSJ reports on the <a href="https://archive.is/44fuq">muted results of regional banks in 4Q</a>.</p>
<blockquote>
<p>Profits dropped sharply at regional banks in the fourth quarter, including at the bigger ones that have generally fared better than their smaller peers. Net income was down roughly 90% from a year earlier at KeyCorp, around 70% at Citizens Financial Group and more than 40% at PNC Financial Services Group. Truist Financial swung to a loss.</p>
</blockquote>
<p>We looked at <a href="https://mindspaninc.com/blog/industry/ACH-Invoicing-JPMC-Breaks-Records.html#2-jpmcs-record-year">JPMC’s 4Q blowout</a> last week. Among the big banks, Citi has a more muted 2% growth in revenue but swung to a $1.8B loss for the quarter.</p>
<p>But that might not be the whole story.</p>
<p>Scott Galloway and Ed Elson of Prog G markets <a href="https://youtu.be/D7iNCeicBn4?t=1011">argue from an investor standpoint, over what to take away</a> from the mixed results in banking in 4Q, and in particular, Citi’s deliberate efforts to take reserves that muted performance.</p>
<div style="text-align: center;"><iframe class="youtube-video" src="https://www.youtube.com/embed/D7iNCeicBn4?si=1WZDbpl-TUW9JJhK&start=1013" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe></div>
<p><br /></p>
<blockquote>
<p>It was almost like a kitchen sink for every Bank this quarter because there was no consistency in the profits. JP Morgan’s quarterly profit was down 15%, Morgan Stanley down 32%, and then Citigroup has this $2 billion net loss, which is just crazy….</p>
<p>But in reality, if you look at the top line, if you look at the revenue, things are actually fine. The revenue is a little down, but it’s stable. The net interest income is up. As you say, because the interest rates have risen. And then their annual revenue is also up. So the big picture is actually pretty good.</p>
<p>I think we often think that the bottom line, the profit, is the number that tells you the full story. But sometimes, in rare cases, that’s actually not true. And in this case, the truer, more accurate number that illustrates what’s really happening here is the top line.</p>
<p>The lesson you want to look at gross margins. You want to look at growth. You want to look at topline growth, all of those things to get a full picture because earnings are a really difficult way to get a read on a company</p>
</blockquote>
<p>Noted was Citi’s <a href="https://www.citigroup.com/global/news/perspective/2024/message-from-mark-mason-on-citi-financial-disclosure">CFO Mark Mason’s release on many one-time items</a> Citi recognized in the quarter, posted two days before the earnings announcement:</p>
<blockquote>
<p>As you’ve heard me say before, we are a bank for all seasons. Our ability to digest these charges and take reserves against potential future challenges is a testament to the strength and stability of our firm and how we continue to weather all types of market environments.</p>
</blockquote>
<hr />
<p><br /></p>
<h2 id="2-the-clearing-house-and-mastercard-push-on-with-real-time-payments">2. The Clearing House and MasterCard push on with real-time payments</h2>
<p>The Clearing House and MasterCard <a href="https://www.pymnts.com/real-time-payments/2024/the-clearing-house-says-mastercard-partnership-fosters-pay-by-bank-and-other-innovations/">extended their partnership on real-time payments</a> this week.</p>
<p>Lee Alexander, CIO of TCH, reiterated both firms’ commitment to broadening the adoption and volume of RTP payments in several key areas.</p>
<blockquote>
<p>Alexander highlighted four key use cases where banks and financial players have expressed a desire to focus on.</p>
<p>The first is frictionless account transfers, allowing customers to easily move money between different accounts, such as from a bank account to a brokerage account, in a quick and seamless manner.</p>
<p>The second opportunity is around earned wage access, with the gig economy accelerating the demand from workers to receive their wages immediately after completing a shift.</p>
<p>The third is instant person-to-person (P2P) payments — and Alexander noted that instant means truly instant, not just in-name only.</p>
<p>The fourth area where RTP can drive differentiation and provide true value is across business-to-consumer (B2C) payments by allowing banks to bill their clients and make instant payments for services such as insurance payouts and loans, as well as enabling businesses to pay consumers instantly.</p>
<p><em>“Obviously, the ways these materialize for the banks’ customers is different … but we’ve spent a long time asking the banks what would be most valuable to their user population, and these are the primary use cases,”</em> Alexander said.</p>
</blockquote>
<p>What remains to be seen is how TCH’s offering will compete or coexist with FedNow, and in particular, the concerns about fraud and risks to both institutions and their customers.</p>
<hr />
<p>That’s it for this week. To go into your weekend, here’s a top-tier recommendation for the 2011 documentary <a href="https://www.imdb.com/title/tt1753549/"><em>Buck</em></a>.</p>
<blockquote>
<p><em>“Solvitur en modo, Firmitur en rey - <br />
Gentle in what you do, Firm in how you do it.”</em><br />
<strong>Horse trainer Buck Brannaman</strong></p>
</blockquote>
<p>The film looks at Brannaman’s past in rodeo and film production, but is much more about leadership than training horses. A short clip:</p>
<div style="text-align: center;"><iframe class="youtube-video" src="https://www.youtube.com/embed/OTqDfb-QhNg" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe></div>
<p><br /></p>
<hr />
<p>And one last thing: we’ve launched a new podcast by and for Community Banking Leaders. It’s called Behind the Vault: Conversations with Customer-Driven Bankers. Check it out, and if you or someone at your institution would like to be highlighted and share your story, apply here -> <a href="https://podcast.mindspaninc.com/podcast-guest">podcast.mindspaninc.com/podcast-guest</a>.</p>
<p>Click below to let us know how we did:</p>
<ul>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/01/26%20Post&body=Loved%20It">Loved it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/01/26%20Post&body=Hated%20It">Hated it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/01/26%20Post&body=Just%20Meh">It’s was just meh</a></li>
</ul>
AI isn't one thing2024-01-24T00:00:00+00:002024-01-24T00:00:00+00:00https://mindspaninc.com/AI-isnt-one-thing.htmlRich EdwardsThe way to frame the AI opportunity for your institution
<p>The way to frame the AI opportunity for your institution</p>
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<source srcset="/assets/img/optimized/posts/Intern-Army.webp" type="image/webp">
<img src="/assets/img/optimized/posts/Intern-Army.webp" alt="a crowded office of people behind computers, almost like a Where's Waldo painting"></img>
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<p id="article"></p>
<p>There’s a tendency to think about AI as one thing, Like a giant monolith. Spectacles like IBM’s Deep Blue chess victory and the later Watson Jeopardy challenge did a lot to reinforce that.</p>
<p>But from a practical standpoint, a better framework might be that of the lonely intern.</p>
<p>Think of the summer intern. They show up at your office for two or three months between freshman and junior years. They are earnest, energetic, and literate. But they don’t have any context about your business, your customers, or how your industry operates.</p>
<p>In short, they lack the context, experience, and judgment of your more senior employees.</p>
<p>You can give them reading assignments, like analyst reports, trade association papers, or your competitor’s literature. They will do a perfectly competent job of summarizing, analyzing, and tying together the key points. However, the synthesis that is required is often missing.</p>
<p>Now imagine you had not one or two or a handful of interns but a whole army of them. Hundreds that could work together in a coordinated fashion without a lot of overhead or friction. Imagine being able to command this army the same way that you would a single intern.</p>
<p>What tasks would you give them?</p>
<p>You could assign 10 of them to every teller at your branches, looking up customer-specific information, performing fraud prevention tasks, calculating the likelihood that the customer at the window is in the market for a new credit card or considering a new home.</p>
<p>If all that work could be done automatically, and a prioritized recommendation made to the person servicing that customer, would that lead to better service?</p>
<p>If you could do that hundreds of times a day, not just in person but for all your touch-points, and measure the effectiveness of that experience, would your perceived service level improve?</p>
<p>Could you stand out on that?</p>
<p>This thought exercise is a first step to understanding AI’s potential for community-based banking. When service is core to your value, not a cost to be stripped away, your potential to stand out and provide a radically relevant customer experience is unmatched in the market.</p>
<p>If this post has inspired some ideas, <a href="/about.html#contact">reach out</a>. We have over a decade of experience in developing and executing data and ML driven use cases for financial institutions. We’d love to give you practical feedback and best-of-breed examples to help you succeed.</p>
<hr />
<p><br />
We’re launching a new podcast by and for Community Banking Leaders. It’s called Behind the Vault: Conversations with Customer-Driven Bankers. <b>If you or someone at your institution would like to be highlighted and share your story, apply here -> </b><a href="http://behindthevaultpod.com/guest">behindthevaultpod.com/guest</a></p>
ACH and Invoicing, JPMC breaks records2024-01-19T00:00:00+00:002024-01-19T00:00:00+00:00https://mindspaninc.com/blog/industry/ACH-Invoicing-JPMC-Breaks-Records.htmlRich EdwardsPayments next opportunity, a massive year for biggest bank
<p>Payments next opportunity, a massive year for biggest bank</p>
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<source srcset="/assets/img/optimized/posts/JPMC-4Q23-Profits.webp" type="image/webp">
<img src="/assets/img/optimized/posts/JPMC-4Q23-Profits.webp" alt="JPMC 2023 Profits"></img>
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<p>For this Friday, we look at whether there is a future for the humble ACH transaction to encompass billing and invoicing. Also, an infographic analysis of the massive 2023 profit (and debt load) of behemoth JPMC.</p>
<hr />
<p><br /></p>
<h2 id="1-making-ach-more-valuable">1. Making ACH more valuable</h2>
<p>Ayo Kunle, Cash App veteran, looks at the potential for <a href="https://writing.kunle.app/p/january-2023-what-if-ach-had-attachments">ACH to disrupt the billing industry</a></p>
<blockquote>
<p><strong>Over the last 2 decades, payment innovations first optimized speed, and now cost</strong>
Roughly speaking, innovations in payments over the last 2 decades optimized speed.</p>
<p>These innovations have sometimes traversed only the messaging layer, sometimes the moneymovement layer, and sometimes both, but the objective has been to ensure that the recipient of funds has access and is able to use their funds earlier than previously possible.</p>
</blockquote>
<figure>
<a href="https://writing.kunle.app/p/january-2023-what-if-ach-had-attachments" target="_blank">
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<source srcset="/assets/img/optimized/posts/Payment-Layers-Kunle.webp" type="image/webp" loading="lazy" />
<img src="/assets/img/posts/Payment-Layers-Kunle.webp" alt="Payment rails characteristics" class="img-fluid mb-3" loading="lazy" />
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</a>
<figcaption class="text-center text-sm text-muted mb-5">
The differences in payments layers
</figcaption>
</figure>
<blockquote>
<p><strong>Many payments have actually a wealth of metadata that “wants” to be communicated along with the payment.</strong></p>
<p>For example, when companies are paying vendors or suppliers, itemized invoices are typically exchanged over email, and payment is executed by ACH, check, or wire.</p>
<p>For healthcare claims in the US, payments are typically via ACH or check, and claims data is typically via 835/837 files. In consumer payments, receipts are exchanged via text, email, physical paper or your app, but payment is executed by card (or paypal or whatever payment network the consumer chooses). The opportunity here, if the messaging layer had more bandwidth, is to include the metadata inside the payment instructions directly. There’s a variety of benefits to doing this. Among others . . .</p>
<ol>
<li>You could authorize directly on specific items, rather than on the whole payment</li>
<li>You could automatically reconcile payments against their purpose, rather than relying on parallel systems to do so</li>
<li>You could explicitly include post-payment context (eg this payment is HSA/FSA eligible, this payment is eligible as a childcare savings payment, 30% of this payment is a tax deductible business expense in category X, etc)</li>
</ol>
</blockquote>
<p>More on the idea, and who would need to be involved in the whole article. However, the concept of moving adjacent to the movement of money is compelling. Look at <a href="https://Autobooks.co">Autobooks.co</a>, which provides simple invoicing and payment management for small businesses as an add-on to their banking account. Simplifying the life and reducing costs of the small businesses that are overrepresented in community banking is a potential for significant growth and stickier customer relationships.</p>
<hr />
<p><br /></p>
<h2 id="2-jpmcs-record-year">2. JPMC’s record year</h2>
<p>David Hollerith of <a href="https://finance.yahoo.com/news/jpmorgan-rises-above-rivals-with-record-annual-profit-of-49-billion-120748907.html?utm_source=chartr&utm_medium=newsletter&utm_campaign=chartr_20240115">Yahoo Finance reports</a>:</p>
<blockquote>
<p>The largest lender in the US reported Friday that it raked in a <strong>record $49.6 billion in annual net income, the most ever in the history of the American banking industry.</strong> And it happened during a year that was the scariest for the industry since the financial crisis of 2008.</p>
<p>That result — buoyed by better loan margins and the acquisition of failed regional lender First Republic — was 31% better than its bottom line in 2022.</p>
<p>It blew away all rivals. <strong>JPMorgan’s annual net income surpassed Bank of America by $23 billion, Wells Fargo by $30 billion and Citigroup by $40 billion.</strong></p>
</blockquote>
<p><br /></p>
<p>A related analysis from <a href="https://businessfinancing.co.uk/the-worlds-most-indebted-companies/">Business Financing</a> takes a look at the global bond market, including the largest debt loads by country and industry. JPMC here as well takes center stage:</p>
<figure>
<a href="https://businessfinancing.co.uk/the-worlds-most-indebted-companies/" target="_blank">
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<source srcset="/assets/img/optimized/posts/06_The-10-Most-Indebted-Banking-Companies.webp" type="image/webp" loading="lazy" />
<img src="/assets/img/posts/06_The-10-Most-Indebted-Banking-Companies.png" alt="Langest banking debt" class="img-fluid mb-3" loading="lazy" />
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</noscript>
</a>
<figcaption class="text-center text-sm text-muted mb-5">
JPMC carries almost 44% more debt than #2 on the list BNP Paribas, source:<a href="https://businessfinancing.co.uk/the-worlds-most-indebted-companies/"> Busines Financing</a>
</figcaption>
</figure>
<hr />
<p><br /></p>
<p>And that is it for this Friday. A great take from <em>Moneyball, The Blind Side,</em> and <em>The Big Short</em> author Michael Lewis, <a href="https://www.youtube.com/watch?v=CiQ_T5C3hIM">“Don’t Eat Fortune’s Cookie.”</a>.</p>
<p>One last thing, we’re launching a new podcast by and for Community Banking Leaders. It’s called Behind the Vault: Conversations with Customer-Driven Bankers. If you or someone at your institution would like to be highlighted and share your story, apply here -> <a href="https://podcast.mindspaninc.com/podcast-guest">podcast.mindspaninc.com/podcast-guest</a>.</p>
<p>Click below to let us know how we did:</p>
<ul>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/01/19%20Post&body=Loved%20It">Loved it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/01/19%20Post&body=Hated%20It">Hated it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/01/19%20Post&body=Just%20Meh">It’s was just meh</a></li>
</ul>
Selecting Talent is Hard2024-01-17T00:00:00+00:002024-01-17T00:00:00+00:00https://mindspaninc.com/Selecting-Talent-is-Hard.htmlRich EdwardsThe most challenging resource to source in 2024
<p>The most challenging resource to source in 2024</p>
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<source srcset="/assets/img/optimized/posts/Accomplishments.webp" type="image/webp">
<img src="/assets/img/optimized/posts/Accomplishments.webp" alt="Hand drawing of personal accomplishments over time"></img>
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<p id="article"></p>
<p>Accenture last week published the results of their executive survey, <a href="https://www.accenture.com/us-en/about/company/pulse-of-change">Pulse of Change: 2024 Index</a>. High on the list of concerns for the coming year is talent:</p>
<blockquote>
<ul>
<li>
<p>42% (of C-suite leaders) say the skills shortage is one of the top three challenges that would hold back their organizations’ ability to respond to change.</p>
</li>
<li>
<p>52% say they are not fully prepared to respond to the changes they will face in the 2024 business environment.</p>
</li>
</ul>
</blockquote>
<p>The difficulties of talent are tied to both the availability of candidates at all levels, but also their skills and preparedness for the changing roles companies need.</p>
<p>In addition, companies of all sizes rarely excel at hiring in the first place. Short of expensive acquisition of entire teams, executives are hampered by their own team’s skills. Most first-line managers interview and select candidates infrequently, if at all. They are rarely supported by HR processes that do little more than screen for keywords and minimum, often irrelevant, qualifications.</p>
<p>Finding the right people requires both identifying skills, <em>game recognizing game</em>, but also hiring for “fit.”</p>
<p>And this is where organizations fall down.</p>
<p>Fit is often used as an ill-defined and never-repeatable process of assessing “fit for the culture.” This usually gets shortcutted into a “would I like to have a beer with this person” gut feel, leading to <a href="https://www.homerun.co/articles/4-types-of-hiring-bias-and-how-to-avoid-them">hiring biases</a>. Do that enough times, and the team starts to look like <a href="https://www.vox.com/2015/7/10/8928069/minions">a little one dimensional</a>.</p>
<p>Fighting this natural tendency requires a concerted effort, sometimes formal training/coaching, but also thinking like a pro-sports scout.</p>
<p>Pro teams regularly acquire situational players to address specific scenarios. These are players that are not only talented professionals, but are unique in their ability to perform in specific circumstances. Closing pitchers in baseball, long snappers in football, and veteran players placed in roles to mentor younger but less seasoned players.</p>
<p><strong>You need to be able to see and bring in the talent best suited to the situation you’re in.</strong></p>
<p>Charlie O’Donnell has a piece I often refer people to called <a href="https://www.thisisgoingtobebig.com/blog/2020/11/27/how-to-talk-about-the-arc-of-your-career">How to Talk About the Arc of Your Career</a>. In it, O’Donnell advises would-be job seekers to refrain from trying to fit their work history into some false Microsoft Word formatted resume narrative.</p>
<blockquote>
<p>Your career will be full of fits and starts, sometimes arching upwards, and sometimes feeling like your best days are behind you. You’ll try to build off each previous step and sometimes you’ll either tear it all down or have it torn down by outside forces—bad luck, a change in the industry, or any number of Murphy’s Law events.</p>
<p>Whatever the direction of your career over time, it doesn’t matter nearly as much as what you can offer right now.</p>
<p>And that chart, and how you present yourself, should look like this—because it is what most reflects reality:</p>
<p><img src="/assets/img/posts/What-I-Can-Do-Now.webp" alt="" /></p>
<p>You will bring more to your next role than you’ve ever been able to bring, at any other point in your career. The key is to show how you do that in a way that makes it easy to understand how, the background that went into that preparation, and to be <strong>convincing that you can reapply it to new situations.</strong></p>
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<p>Finding the “best fit” people for the challenges you face is more than their skill. It’s also the experience of solving problems in similar circumstances you face. Are you in a turnaround? Speed and comfort with ambiguity are premium attributes. Sustaining and building on success? Impatience with the status quo may work against you and cause unneeded friction.</p>
<p>As a leader, your primary job is to create an environment where your team has the opportunity to do their best work every day. <a href="https://www.jimcollins.com/article_topics/articles/first-who.html">Getting the right people on the bus</a> is a foundational step that can accelerate or completely frustrate all your other efforts.</p>
<p>Being able to both see and actively select the right temperament and comfort with your situation can make the difference between winning the competitive race or being mired in mediocrity.</p>
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<p><br />
We’re launching a new podcast by and for Community Banking Leaders. It’s called Behind the Vault: Conversations with Customer-Driven Bankers. <b>If you or someone at your institution would like to be highlighted and share your story, apply here -> </b><a href="http://behindthevaultpod.com/guest">behindthevaultpod.com/guest</a></p>
The wind at banking's back, fraud in real-time payments2024-01-12T00:00:00+00:002024-01-12T00:00:00+00:00https://mindspaninc.com/blog/industry/Accenture-2024-Trends-real-time-fraud-tools.htmlRich EdwardsAccenture's hot take on tech and banking, fraud tools lacking in RT
<p>Accenture's hot take on tech and banking, fraud tools lacking in RT</p>
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<p>This week, we look at Accenture’s surprisingly optimistic outlook for banks in 2024 and how providers are struggling to develop the fraud tools needed for growing real-time payments adoption.</p>
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<h2 id="1-banking-trends-for-2024">1. Banking Trends for 2024</h2>
<p>Accenture published their annual <a href="https://www.accenture.com/us-en/insights/banking/top-10-trends-banking-2024">trends in banking research report.</a> The report covers areas from gaps in digital capabilities to emerging risks (like real-time below), overcoming the drag from legacy cores, and re-thinking operating models. However, the biggest impact on financial institutions will likely come from the successful use of AI.</p>
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<p>As we enter the Age of AI, many bankers feel the same sense of awe that their counterparts did a quarter of a century ago as they stood on the verge of the Digital Age.
Michael Abbott / Accenture Global Banking Lead</p>
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<p><img src="/assets/img/posts/Accenture-Bank-Potential-Gen-AI.webp" alt="Banking is likely to be more profoundly impacted by gen AI than any other industry." /></p>
<p>The opportunities are not just generative AI but also the ability to quickly extract insights from data to provide improved pricing and service levels in areas like recommendations and advice. Well worth digging into is the section on <em>Capturing the Digital Divide</em>:</p>
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<p>While most banks have mastered digital, its focus—more often than not—has been on servicing. Turning even a modest number of digital interactions into opportunities holds immense potential. To do that, banks will need to find ways to have meaningful conversations with customers across digital channels.</p>
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<h2 id="2-fraud-concerns-grow-with-real-time-payments-adoption">2. Fraud concerns grow with real-time payments adoption</h2>
<p>With the accelerated adoption of real-time payments, including The Clearing House’s RTP, FedNow, and Zelle (if settled with RTP), fraud presents new threats. What is clear from talking to banking leaders and heads of payment operations is that the tools available to institutions lag behind the quickly evolving threats.</p>
<p>The Fed’s <a href="https://www.paymentsdive.com/news/Fednow-fraud-banks-real-time-payments/702527">recent meetings with institutions and partners</a> have highlighted this gap and the urgent effort on the part of system operators and vendors. FedNow’s head of product development, Bernadette Ksepka, spoke to participating banks last month with a promise of better capabilities to manage risk.</p>
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<p>As it’s building out the new system, the Fed is planning to enhance “configurable fraud controls,” among other improvements, she noted as part of a slide presentation. Those tools will be in addition to some FedNow fraud-prevention capabilities and reporting requirements that were there from the start.</p>
<p><strong>“We know that fraud is top of mind for many of you, and it’s definitely top of mind for us,”</strong> Ksepka said.</p>
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<p>Exposure to fraud is often cited as the leading reason for FIs not implementing real-time payments. Balancing that risk against customer demands for lower friction banking puts institutions in a difficult position, <a href="https://mindspaninc.com/blog/industry/Checking-and-Parametric-Insurance.html#2-americans-love-paper-checks-thieves-love-them-more">sometimes to great cost</a>.</p>
<p>Fintech Plaid is expanding its fraud capabilities, specifically to address the <a href="https://www.pymnts.com/news/faster-payments/2023/plaid-says-consumers-ready-for-real-time-payments-change/">growing demand for real-time payments</a>. Mollie Curran, payments lead at Plaid, points to where they are building new capabilities for customer institutions.</p>
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<p>Risks are threefold, she contended. There’s identity risk — that merchants, banks and platforms can trust that someone is who they say they are. Solidifying that trust means ensuring that know your customer (KYC) systems are connected to the rest of the commerce ecosystem..</p>
<p>Account risk (like account takeover) mandates that verification and monitoring are robust. And finally, there remains transaction risk, which involves making sure the receiver of funds is legitimate as well.</p>
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<p>That’s a wrap for this week. Still wearing an onion on your belt like it’s 1993? That’s OK because <a href="https://twitter.com/Criminalsimpson/status/1742979186376204417">it was the style at the time.</a>. Click below to let us know how we did:</p>
<ul>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/01/12%20Post&body=Loved%20It">Loved it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/01/12%20Post&body=Hated%20It">Hated it</a></li>
<li><a href="mailto:blog@mindspaninc.com?subject= 2024/01/12%20Post&body=Just%20Meh">It’s was just meh</a></li>
</ul>
How much does your service cost?2024-01-10T00:00:00+00:002024-01-10T00:00:00+00:00https://mindspaninc.com/how-much-does-your-service-cost.htmlRich Edwards...and does cutting corners cost even more?
<p>...and does cutting corners cost even more?</p>
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<p>How does your customer service level get prioritized in your budget? If you’re like most institutions, it isn’t. Often, it’s buried in noninterest expense, or worse, split between several different line items that each struggle to justify their existence, let alone growth.</p>
<p>So, how do you position your efforts? Is service level a necessary evil or opportunity? Seth Godin explores two winning examples in <a href="https://seths.blog/2024/01/customer-service-is-a-choice/">Customer service is a choice</a>:</p>
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<p>Some brands made it a part of their marketing strategy (Zappos, for example) while others saw it as a bottomless expense and did as little as they could (Google, for one.) The successful companies in the no-support group spent the money they saved on user experience, working hard to make it so you’d never need to call them.</p>
<p>Both are defensible choices.** Great customer service is expensive, but it’s also free.** It’s free because delighting a customer who has an issue is the single cheapest way to not only keep that customer, but also have them spread the word.</p>
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<p>So, how do you prioritize efforts with so many competing priorities? It comes down to why you’re winning today. If you’re the low-cost provider or sole provider in your geography, then by all means, provide the leanest offering possible, i.e., <a href="https://www.youtube.com/watch?v=ytdgQmd7jh8">Costco</a>.</p>
<p>However, if the service you provide is really what sets you apart from competitors, you can’t afford to. This is the path to mediocrity and irrelevance.</p>
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<h3>If your competitive advantage is customer service, then you need to deliver that better than anyone else your customers/members would consider</h3>
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<p>Not necessarily in the world (but aim high). And not necessarily who you think your competitors are. <strong>But, who your customers would consider instead of you.</strong></p>
<p>How can you tell who your customers are considering? <strong>Ask them.</strong></p>
<p>Looking for a deliberate, disciplined approach to gathering competitive intelligence? See this <a href="https://patticus.com/2023/12/16/competitive-research-playbook/">ridiculously detailed breakdown</a> by ProfitWell founder Patrick Campbell, built from his time as an analyst with a 3 letter agency.</p>
<p>The bottom line -> if your strategy is differentiated service, you must go all in. Your job is then to determine the most efficient and effective way to deliver that service. Falling short on your promise, whether explicit or implied, is the fastest way to bring an end to your institution.</p>
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<p><br />
Also, we are recording the inaugural episodes of a new podcast by and for Community Banking Leaders. It’s called Behind the Vault: Conversations with Customer-Driven Bankers. <b>If you or someone at your institution would like to be highlighted and share your story, apply here -> </b><a href="http://behindthevaultpod.com/guest">behindthevaultpod.com/guest</a></p>